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Rare earth and the Green IT paradox, follow up

LYNAS is facing potential delays in the approval of its Malaysian rare earth processing plant, after an International Atomic Energy Agency report recommended further safety measures for the rare earth plant.
A raft of new conditions is to be met before the plant is approved. If that is the case this will also have a huge impact on the prices of rare earth metals that are being used in IT and Green Technology.

Lynas plans to process rare earth ore at the Malaysian facility from its Mount Weld mine in Australia. The $230 million refinery, which is about 40 per cent completed, is an effort to break China’s monopoly on rare earth metals. Within two years the plant is expected to meet a third of world demand for the materials outside China and will yield $1.7 billion a year in exports.

Mount Weld

Export restrictions by China in the last year have caused global shortages of rare earths and soaring prices. Therefore other companies are now scrambling to open new refineries in the United States, Mongolia, Vietnam and India by the end of 2013, which could cause rare earth prices to tumble down.

REE prices

Following public concern that radioactive waste (thorium) produced by the plant would not be disposed of properly and could endanger local residents and the environment (see Rare earths and Green IT paradox). Malaysia has put the project in eastern Pahang state on hold temporarily. The Malaysian government called in the IAEA to conduct a review of the plant.

The project is also plagued by environmentally hazardous construction and design problems, according to internal memos and current and former engineers on the project. As stated in an article in the New York Times “the construction and design may have serious flaws, according to the engineers, who also provided memos, e-mail messages and photos from Lynas and its contractors. The engineers said they felt a professional duty to voice their safety concerns, but insisted on anonymity to avoid the risk of becoming industry outcasts.”

Lynas has previously said it expects to be operating in Malaysian by September, but now faces delays of up to a year, as the Malaysian government implements the IAEA recommendations.

The Malaysian Trade Ministry said on Thursday that Lynas would only be given an operating licence if it met all the conditions. Now the International Atomic Energy Agency panel has recommended further safety measures for the rare earth refinery. The IAEA report found the plant complied with international radiation safety standards but regulation should be improved. The report recommended 11 new conditions for the facility. The conditions include that Lynas develop a stronger long term waste management plan, including a decommissioning plan, and make some technical changes to the plant to allow some waste products to be declared “non-radioactive for the purposes of regulation”. The IAEA report also stated that a follow-up review should be conducted over the next one to two years.

“Until this is done, the status quo remains: there will be no importation of raw materials into the country, and no operational activities will be allowed on site,” said a joint statement from International Trade and Industry Minister Mustapa Mohamed and Maximus Johnity Ongkili, minister of science, technology and innovation.

Green technology and Green IT needs rare earth metals. But all the appropriate feasibility, environmental and regulatory work must be done at forehand. If not, then mining and refining rare earth metals can have huge environmental, health and safety consequences. The Lynas case also shows that you have to take the whole life cycle of Green Technology and Green IT in to consideration before you can truly say you are using Green Technology.